IN: Industrial Production

Highlights
Industrial production slowed significantly in March. At 2.1 percent annual output growth was less than half of its weaker revised mid-quarter rate and also short of market expectations.

Moreover, the deceleration in the manufacturing sector was somewhat more marked as the yearly increase in output here dropped from 5.2 percent to 2.2 percent. Elsewhere, growth in mining and quarrying slipped to 0.9 percent while electricity was 2.0 percent higher on the year or less than a half of its February increase.

Combined with another fall in consumer price inflation in April (see today's calendar entry) the slowdown in goods production at quarter-end should be seen positively for RBI easing hopes and will boost speculation about a rate cut as soon as June.

Definition
Industrial production index measures changes in the volume of production in the mining, manufacturing and electricity sectors. The data are not seasonally adjusted.

Description
Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

The index is a quantitative index with the production of the items being expressed in physical terms. The Index is compiled by taking into account the quantities of items produced during the current month, compared with the average monthly production in the base year. Selection of items is based on the total production of the items as the primary (main) product as well as secondary (by) product. Data are available monthly within six weeks of reference month.

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